I believe with all my heart that a man who fathers a child is responsible for the emotional and financial need of that child. From debt incurred during the previous marriage, past due child support and the IRS seizure of income tax refunds, our first year as a stepfamily was inundated with fiery financial darts from the enemy. So while you’re making resolutions to release weight, consider these fundamental tips for your stepfamily finances:
1. Did you know that you could disinherit your biological children when you enter into a stepfamily? That’s right, if you predecease your spouse, you can disinherit your children. For example, if I die before my husband, my life insurance and other assets transfer to him. Then when he dies, everything passes to his next-of-kin, his three biological children. And if his children are minors, the inheritance would be granted to his ex-wife to manage. My biological sons would not be entitled to anything, unless his ex found it in her heart to do so. Not willing to leave my sons’ college funds in the hands of another, I consulted an attorney to draft a will. The small investment was well worth the peace of mind.
In his Blended Families An Anthology story, Money, Joshua Johnson, certified financial planner, explained the effect of mammon on estate planning. If the transference of your assets has not been finalized prior to you reaching the pearly gates, your ex-spouse will be the court-appointed manager of the assets you wanted to leave to your biological minor children. And if that’s not enough to make your toes curl, your ex-spouse will also receive your inheritance, if he or she is unmarried and without children, and your children predecease you. Your ex is considered the next-of-kin for your children. No way! Way! To protect your new spouse when a prenuptial agreement is not in place, consider re-titling your assets in both your names. Also, rename the beneficiaries on your life insurance policies and retirement accounts. Consult a qualified estate-planning attorney to discuss these issues.
How will your assets transfer upon death? This decision may not be easy, unless you have decided that all the children—biological and step—will be treated equally. Some parents may want to keep certain assets in their family bloodline. The couple must work through these issues; otherwise the state will determine how your hard-earned assets transfer. Save your family the hassle and plan now. Don’t unintentionally disinherit your children because you did not plan correctly. Proverbs 13:22 states that a good man leaves an inheritance for his children, so be a good parent and invest in a will.
2. Individual or joint accounts. Will the two of you combine your incomes or will you keep them separate? As a rule of thumb, Joshua advises couples to combine household income and treat it as “ours.” In many cases, one spouse brings home all, or a greater portion, of the income. Combine it so that all of the household expenses including mortgage, credit card debt, groceries and vacations are paid from the family pot. By using this strategy, you can eliminate many heated discussions. When couples try to keep things separate, at least one person may be unhappy. If you two are working to become one flesh, then that includes the money. Time out for paying everything Dutch!
3. Your joint credit status will determine the terms you receive for loans, credit cards and employment opportunities. It is not uncommon for one spouse to have a history of paying bills on time and the other spouse to have a negative credit record. When applying for credit, you may receive unfavorable terms, but remember; derogatory credit is a temporary situation. Negative history comes off your report in seven years (ten years for bankruptcy). During this gestation period, establish a budget and spending plan. Pay all of the expenses on time and improve the negative credit rating. Find out if any credit arrangements from a divorce exist. Non-payment of accounts from your ex-spouse can affect you and your new spouse.
Wisdom abounds in reviewing your credit reports so that no surprises spring up in the future. Pull your credit reports from the three main bureaus, review them together and then annually thereafter. Make sure you visit the correct website for this information: AnnualCreditReport.com. Imposter websites market free credit reports, but eventually charge a fee.
Free reports can be requested online, by calling 877.322.8228 or by writing to
Annual Credit Report
PO Box 105283
Atlanta, GA 30348-5283
Social Security benefits. A keynote to mention is that you are not eligible for your ex-spouse’s benefits if you remarry before age sixty. You will be eligible under your new spouse’s benefits though. If your own Social Security benefits are higher than your spouse’s, you will receive the higher benefit amount. If you remarry after age sixty, you have the option of choosing the higher benefit of your current or former spouse. This selection applies if you are a disabled widow(er) or a disabled surviving former spouse who marries after age fifty. If your new spouse is receiving Social Security benefits and you have been married for a least one year, or you are taking care of your spouse’s child under the age of sixteen, you can receive benefits based on your spouse’s wage record. For more information, contact the Social Security Administration.
As you can see, I am a firm believer in combining assets and expenses when a couple becomes one flesh. With a few exceptions, experience has proven that this process works better when both spouses are in agreement. Handling debt, credit, college funding and other financial issues tends to gel easier. These matters are best discussed prior to marriage. If you are already married, communicate with each other as soon as possible. Money tends to be one of the primary reasons for separation. Get a hold of it now and it will not be a roadblock for your marriage in the future.
Part II of Stepfamily Financial Resolutions will focus on the compounded affect of child support in this unique family dynamic.
The bestselling author of Blended Families An Anthology, Valerie J. Lewis Coleman has helped thousands of families navigate the challenges of child support, visitation, discipline and more. With over twenty years of experience in family and relationships, this expert has given advice on varying issues including baby-momma drama, defiant children and disapproving in-laws. On her journey to assist others with building strong families, she shares her personal testimony and practical tools to help you stop the stepfamily madness in your home! To learn more about Valerie, her books and overcoming relational matters, visitPenOfTheWriter.com.
image via © Frenta.